The Talk: The Washington Tea Party

The Talk: The Washington Tea Party
July 29, 2012

Chip Lebovitz: With less than a week to the August 2nd default deadline, both Congress and the president have still failed to pass a debt ceiling increase. The failure is due, in part, to the extremely divided Republican caucus split between a Tea Party faction opposed to nearly any debt ceiling increase and a mainstream element supportive of a spending cut only increase. Ross, what’s piqued your interest most about the recent GOP dynamic?

Ross Freiman-Mendel: Speaker Boehner is really stuck between a rock and a hard place. He must find a solution that stands a chance against two ideologically intransigent caucuses. It’s certainly harder to govern in the majority.

Chip Lebovitz: It’s nice of you to admit to the Republican caucus’ intransigency, though I’m not so sure that’s a fair characterization of Democrats. Without the Tea Party movement, Speaker Boehner would’ve already passed a grand bargain with President Obama and Congressional Democrats that would have reduced our deficit by $4 trillion and seriously reformed entitlements, weakening Obama on his left flank for the 2012 elections. Instead, Speaker Boehner and the Republican establishment are forced to deal with an insurgent element of their caucus that is willing to sacrifice political victory in order to achieve an impossible goal – a balanced budget amendment.

Ross Freiman-Mendel: That’s a bit harsh. The Tea Party caucus is rightly forcing Boehner, Senate Democrats, and Obama to acknowledge the referendum that propelled the GOP to big gains during the midterm elections. I think it’s fairer to say that the Obama administration has been disingenuous during these talks.

Chip Lebovitz: Disingenuous is ignoring a phone call from the president of the U.S for nearly 24 hours like Boehner did during debt ceiling negotiations last week. Arguments against Obama focus squarely on his lack of a concrete plan – an unfair statement due to the nature of the talks. To paraphrase Washington Post columnist Charles Krauthammer (a future ChrossTalk guest), the Tea Party is pushing for too much. They assume that Republican control of half a branch of government gives them free reign over the entire system and have prevented House Republicans from accepting a grand bargain that would have shored up two Republican weaknesses in the 2012 general elections: a need for bipartisan cover on entitlement reform and their weak poll numbers on the economy.

Ross Freiman-Mendel: To paraphrase Krauthammer again, disingenuous is more accurately scolding Congress for not dealing with a problem the president had not dealt with for the first two years of his presidency. The grand bargain was anything but a panacea. Why can’t the Tea Party hold certain ideological standards, when the President and Congress passed major legislation for two years with little to sometimes no Republican support? Just look to Obamacare for example.

Chip Lebovitz: Defending the Tea Party by attacking the President just highlights that party’s flaws; problems that Speaker Boehner is facing right now with a Tea Party revolt threatening his new deficit plan. The fact that the Tea Party has to stay on the offensive shows the lack of substance they have to defend. Comparing the right to govern between Tea Party control of a quarter of a branch of government and past Democratic control of two branches is illogical.

Ross Freiman-Mendel: Any elected official has the right to represent the will of his constituency: the amount of government one party controls does not equate to one’s “right to govern.” For example, the untenable nature of Cut, Cap, and Balance to Democrats does not disqualify its merits or substance, as we debated last week. But it seems a moot point, because Boehner has shored up enough votes to pass his plan. Faced with a potential default, will Senate Democrats accept it?

Chip Lebovitz: The untenable nature of Cut, Cap, and Balance happens to be caused by its merits or lack thereof. But you might want to catch up on your reading, as of this morning, Speaker Boehner still does not have the votes and Senate Democrats will not accept his solution. The more relevant question is, what are the effects on the movement’s presence in the 2012 elections due to this Tea Party debt ceiling insurrection? With Tea Party event participation down 50 percent this year and their policies representing a small sliver of the electorate, is it really wise for GOP candidates to appeal directly to the Tea Party and risk alienating the independents that decide most modern presidential campaigns?

Ross Freiman-Mendel: As with all movements, popularity wanes when reality sets in — shellackings like the one the president received in the midterms are to be expected. After cajoling, Speaker Boehner has most freshman Tea Party members on board with his plan and another chance today to pass his plan. If anything, the Tea Party forced debate when the president initially wanted a raise without cuts.

Chip Lebovitz: The Tea Party zeitgeist has forced the debate far more to the right than what the president and the public wanted, but at the same time they may also force America to default – an economic shellacking no rational person expects or frankly deserves.

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42 responses to “The Talk: The Washington Tea Party

  1. remember that law of unintended consequences? consider the idea that the u.s. could default and the markets could rally in response to some evidence that the u.s. is taking its debt debacle seriously. whether or not moody’s downgrades u.s. debt, the markets have already/ will continue to factor in our less than stellar balance sheet. your differing points of view are food for thought… but please don’t speak as if the outcome is a fait accompli. no one, repeat no one, knows what the true outcome of any of the potential choices might be. posturing isn’t pretty.

  2. “The Tea Party caucus is rightly forcing Boehner, Senate Democrats, and Obama to acknowledge the referendum that propelled the GOP to big gains during the midterm elections.”

    Ross, this is no time for the Tea Party to force acknowledgment of a elections that happened almost a year ago. The time for trying to score political points has passed, and this is time to make serious governing decisions. I believe the election of these Tea-Party backed Republicans wasn’t solely based on the power of the Tea-Party movement but also a result of the American people’s dissatisfaction with the rate of recovery . I think that it would be wise for everyone, especially Boehner take the grand bargain.

  3. I really take issue with the idea that Obama is at fault in these talks. I know you’ve read the Constitution, Ross: where does it give the President any power to effect (note the e) legislation? It doesn’t; Congress has that power. Obama has done precisely what the Republicans criticized him for not doing enough of during the health care debate: attempted to facilitate bipartisan discourse on a major issue. I really do think he’s made a good-faith effort, despite the talks continuously being thwarted by partisan nonsense. I also think that Boehner and McConell (except for his “let Obama raise it and then we’ll shit on him for it” idea) have been uncharacteristically cooperative. Sure, Tea Partiers have the right to represent their constituencies, but that doesn’t mean they have to do what their constituents would do, it means they have to do what’s in the interest of their constituents. People who voted for the Tea Party (and indeed, most Americans) are unlikely to understand the potential implications of a US default for the global financial system, so I don’t understand why a representative should have to take into account what some hick in Texas thinks when they’re voting. As Koby says, and as I think Democratic and Republican leadership have, for the most part, acknowledged, this is not the time to score political points at the expense of our debt’s credibility. We’ve raised the debt ceiling over a hundred times since it was established in 1917 (I think); let’s do it again.

  4. KOBLART, I couldn’t agree with you more! The time for trying to score political points has passed and this IS the time for making serious governing decisions. I would love for the primary leader of our nation, our president, to offer his roadmap to economic success. I wish he wasn’t playing political games, insisting the deal extend past the election in order to buy himself political coverage. He mentioned during talks that the Republicans would never have treated Reagan the way they treated him… why should they? Reagan offered some bold leadership. This president continues to vote “not present” on major, pressing issues faced by our nation.

  5. Evan, if I understood your comment correctly, it seems that you are sure that Tea Partiers in specific and most Americans in general have no hope of understanding the potential impact of a US default on the global financial system. Who exactly does, and based on what experience are they so expert? Or, is everyone speculating? I take umbrage at your characterization of a “Texas hick.” I thought we vote because the people’s voice matters. If it doesn’t matter what the Texas hicks (and everyone who doesn’t agree with you) thinks, why not just have a “brilliant” tyrant lead and let’s don’t bother with elections at all? Also, I am not sure why, if a “Texas hick” is not qualified to have a valid opinion, should I trust the president’s opinion. He may have graduated some Ivy League schools, but I hardly think being a community organizer qualifies him to be an expert on economics. For that matter, what expertise do any of the Congressmen of any party have given the unprecedented nature of the debt disaster?

    It seems like when anyone disagrees with the Democrats, they are “stupid.” What if they simply don’t agree, and don’t want to go along with what in their view, is a destructive course that undermines everything that has been great about the US?

  6. So Jon, you actually think that most Americans understand the global financial system? Did most Americans understand the implications of the health care reform debate? Or financial reform? Seriously unlikely (read the first two paragraphs of this article, and then tell me that Americans understand the financial system: http://www.newyorker.com/talk/financial/2010/07/05/100705ta_talk_surowiecki) . Here was my point, though: The responsibility of a legislator is not to look at a bill and say, what would my constituents think of this piece of legislation. The responsibility of a legislator is to look at a bill and say, is this in in the interests of my constituents. The two could lead to radically different conclusions, precisely because Americans are chronically underinformed. Of course, if a Tea Party legislator, or any legislator, rationally believes that a particular bill is not in the interests of his or her constituents, then that legislator should vote no, regardless of whether 51% of that constituency would vote yes. That ideal is the core of representative democracy; not that people have a direct voice in the daily affairs of government, but that the people decide who represents their interests. The people do have mechanisms of communicating their interests to the legislators who represent them, and legislators should, in many cases, take those opinions into account. But ultimately, the legislator has to decide whether the bill is in the interests of his or her constituency, and in this instance, it seems abundantly clear that a debt ceiling increase, and by extension, the avoidance of American default, is in the interests of this nation.
    Regarding your comments on the President, look to the first thing I said in my prior comment: where in the Constitution does the President have any power to enact legislation? He explicitly does not, and for good reason. The only power that the President has in this case is the power to bring together disparate actors and work towards a bipartisan solution. That is precisely what he has attempted to do; I completely take issue with the idea that he has played “political games”, as I would were the same charge to be levied against Boehner or McConnell.

  7. It’s also worth noting that, while individual legislators are unlikely to be economic experts, they employ many people who are, and the research and counsel of those individuals likely informs much of the legislators’ proposals.

  8. I look at it like this, Evan: way back, say, in the time of Christopher Columbus, all the powers that be “knew” that the earth was flat…anyone who felt otherwise was the 15th century equivalent of a “Texas hick.” It took a few brave souls to think out of the box, challenge the status quo, take exception, to take humankind a step forward, disprove all the “experts” and demonstrate the earth is spherical. Likewise, the “experts” today are sure they understand what the impact of default would be. I don’t share the hubris. The continuous red alert works well for controlling the masses, especially if they don’t “understand.”
    In my view, the multihundred year experiment that is the United States is a failure, courtesy of both parties. It just so happens that the nail on the coffin is being securely fastened by our current president, the latest incarnation of corruption and mismanagement.

  9. So you’re actually so skeptical of authority that you’d accept the opinions of a public that demonstrably knows almost nothing about personal, let alone governmental, finance over the opinions of people with degrees from top universities and years of experience in issues of policy (referring, again, to the research staffers and policy assistants, not legislators). You’re obviously entitled to your opinion, but it seems completely irrational. Would you rather learn how to play QB from me (I’ve never played football in my life and am not particularly athletic) or Dan Marino?
    Your argument is also completely reductive. Simply because those in power are not right about everything all of the time, it does not therefore follow that they’re wrong about everything all the time. You can’t just cite one historical example of a belief irrationally held by lots of well-educated people and then draw the conclusion that all well-educated people always hold only irrational beliefs.

  10. I don’t conclude that all well-educated people only hold only irrational beliefs…just that the hubris that characterizes those so “clearly” in the know has been proven hollow over and over throughout history. Leeches for curing infections, shall we? Your favorite Texas hick is well aware that her price per gallon at the gas station has doubled, and she’s having trouble paying her food bill. She doesn’t need Paul Krugman to explain why Keynesian economics will save the day… she actually needs someone to save the day. She needs some action, not more of the same empty, academic talk.

    By the way, have you noticed that just as it seemed possible that default could actually occur, miraculously, more revenue appeared than had been expected for June/July, conveniently pushing financial Armageddon off by 2 or 3 weeks? Did you notice a few weeks back that the Obama/Bernanke gang warned that if a deal wasn’t reached by Sunday, the Asian markets would tank on Monday? They deal wasn’t reached and the markets opened with a yawn… disaster averted again! Amazing!

    One more thing… I appreciate your respect for “education.” Yes, it’s a valuable tool, but you get your Harvard degree whether you graduate with an “A” or a “D.” We are all aware of the untold numbers of incredibly intelligent people who were not college educated: Mark Twain, Steve Jobs, Mark Zuckerberg… the list is endless. I’m sure you love George Bush, an Andover and Yale graduate. He really proves your point.

  11. So you do think that the average American understands these issues? Because that seems to be empirically false, leaving any legislator who wants to vote exclusively on the basis of constituent opinion in a sort of bind.
    And my argument was this: I said that people are working on these issues who are quite familiar with them and learned in economic policy, and that these people most likely (note the lack of absolute terms) will craft better solutions than average Americans. You said that smart people have been wrong before, but offered no actual reason why that was true in this case (or why we shouldn’t still, on the margins, defer to expert opinion). So you have two options: Either take the position that we should never trust expert opinion, which is completely untenable, or give specific reasons why the American people are, in this specific case, more likely to reach a beneficial conclusion than the experts. You can’t just make general statements and have that be accepted as true.
    Likewise, I didn’t say that education is always something we should defer to (ie, somebody says he went to Yale, so we accept a priori that whatever he may possibly say is true). What I said was that, on the margins, people who went to college and have received distinctions and have lots of experience are more likely to be good at their discipline than someone who didn’t. Of course it isn’t always true, but I’d still prefer George Bush’s business opinion to that of someone who didn’t graduate high school. Education, you’re correct, is not everything, and should not be interpreted as such. But if you gave me a choice, offering no other details, of two advocates: one who graduated from Harvard Law (or any law school, for that matter) and one who has never studied law in his entire life, I think it’s completely reasonable for me to want the law school graduate (which is, by the way, why advocates are required to pass the bar before they can appear in court). You didn’t respond to my example with Dan Marino, which is disappointing, because I was quite looking forward to our football lesson. Unless, of course, you’d rather have an expert teach you, in which you undercut all of the arguments you’ve made thus far.

  12. OK Evan, I agree to play the game, as per your rules: You take all the expert business opinion you’d like from George Bush and I’ll take it from a couple of people who never graduated high school:
    1. John D. Rockefeller, Sr. : the first American billionaire and founder of Standard Oil
    2. Henry Ford, founder of Ford Motor Company, the first to use the assembly line and revolutionize the auto industry.
    I recognize my two choices are not easily accessible for their advice since they are both dead, but I think you get my point.
    Let’s also don’t forget a litany of Arabic oil magnates, and the list goes on.
    Success in business has always been notoriously unrelated to higher education. On the flip side, take Paul Krugman, who pontificates from his Ivy tower…. what business has he built?

  13. Right, and note that I specifically noted that my argument was general. Of course if you offered me two specific people, I would evaluate their merits with education being only one factor, and an unimportant one at that, of many. But that assumes complete information, which we don’t here have. Even if I stipulate to your assertion that a majority of Americans, or Tea Partiers, are opposed to a raise in the debt ceiling, and was then given the choice between trusting the average Tea Partier vs the average economist, I would likely chose the latter. This is not to say that there aren’t, perhaps, possibly, some Tea Partiers out there who might have innate brilliance in fiscal policy, moreso than some economists, and if you gave me the choice between those two, I would gladly chose the former. That isn’t the choice that we have, so in the face of uncertainty, we ought to defer to the party that is, on the margins, more likely to produce a correct analysis. I don’t think that this should be a controversial statement, unless you are willing to argue that we should generally, rather than listen to CBO analyses of legislation, appoint a committee of random Americans to determine the cost of legislation. And you still have yet to respond: who shall accompany you to the football field nearest your place of residence tomorrow afternoon, in order to teach you the finer points of quarterbacking: me, or Dan Marino? Or for that matter, some random person who has never played football, or a random NFL quarterback? I am eagerly awaiting your response, as I must make the proper arrangements.

  14. If you chose me, I will refuse to be flown by a licensed pilot, or anyone who has received any sort of aeronautic training. I’ll just walk down the block, knock on a random door, and find a random person willing to do the job.

  15. And alas! If only the computer on which I currently type were made by somebody without a background in computer engineering. We shouldn’t have to be restrained in our computer design by what Steve Jobs or Bill Gates thinks is best; we should have our own voice in the computer-making process.

  16. Concerned Citizen

    I don’t mean to jump into Evan and jon’s (scintillating) conversation here, but I do feel I need to point out that President Obama was leading on the debt issue for a long time as he was negotiating the so-called “Grand Bargain” with John Boehner. Unfortunately, anything Mr. Obama embraces, the Tea Party reflexively must hate, so the “Grand Bargain” was thrown out. (Incidentally, I couldn’t be happier that the Tea Party torpedoed that absolutely disastrous deal.) The best thing Obama could do to move the bill forward was to step back, which is exactly what he did.

    Also, saying both caucuses are equally intransigent is simply laughable. The Democrats have drawn many lines in the sand, only to have the Republicans walk all over them. First it was, “Only a clean debt ceiling increase.” Then, “Well, it had better have revenue.” Next, “Ok, it can be all cuts, but it has to take us through the next election.” Now, we seem to be at “All cuts, and an across-the-board spending cut if we can’t find more.” (An utterly absurd position, as it gives many Republicans zero incentive to negotiate.)

    For the record, the best deal is spending cuts, offset by short term payroll tax cuts for more stimulus. This supercommittee business has always been nonsense, especially since Dems have allllllllll the leverage on taxes.

  17. Evan, sorry, you can’t engage me on football…not in the least bit interested.
    Concerned, nice to have you back in the fray.
    Given overnight developments, I believe the Republicans, who I distain with nearly as much vim as I do the Democrats, are about to hand the both of you some version of what you are bucking for. Congrats. I guess your grandkids and great grandkids won’t mind paying for the previous generations’ profligacy, and you don’t mind asking them to do their “fair” share.
    Evan, you still haven’t convinced me about the wisdom of the majority of our elected officials. Remember when our esteemed leaders (and their esteemed advisors) were crafting Obamacare? The very venerable Nancy Pelosi wisely noted, “we have to pass the bill so you can find out what is in it.” Sorry if I’m less than comfortable deferring to her and her cronies.
    Who gets my vote in 2012? You probably guessed it: Ron Paul.

  18. Concerned, can you cite any evidence whatsoever that short term payroll tax cuts have done anything to boost the economy? there is a desperate need to create new jobs…. putting an extra $12 into each person’s paycheck may marginally “help” the already employed, but what exactly is it doing to fix the much grander issue?

  19. Some points to consider that need to be brought into certainly THIS discussion but also into the larger dialogue:

    1. The notion that the United States has never defaulted on it debt is simply untrue. The United States defaulted in 1842 in the midst of the a greater depression than that of 1920’s:

    “They were the world’s richest and shrewdest investors, and they rode a wave of globalization to buy bonds in a promising developing country. When that country defaulted, they were livid. The year was 1842 and the country was the United States.”
    – Nicholas Kristof, in the September 20, 1998 issue of New York Times International

    2. Please refer to:

    http://www.bipartisanpolicy.org/sites/default/files/Debt%20Ceiling%20Analysis%20FINAL%20%28updated%29.pdf

    To quote Caroline Baum from a piece written on Friday appearing on Bloomberg using data from the aforementioned report. (BTW the Bipartisan Policy Group leans neither to the Left nor the Right.)

    “The Treasury is not going to default in August, nor in subsequent months for that matter. An estimated $172.4 billion of tax revenue next month is more than enough to cover the $29 billion of August interest payments. For fiscal 2011, which ends Sept. 30, the Treasury is expected to take in revenue of $2.2 trillion, while only $214 billion is needed to service the debt.
    And even if it lacks the authority for new borrowing, the Treasury can continue to roll over existing debt.”

    3. With all due respect to the field of study that is called economics, I think we all could agree that it is not an exact science. In fact, in order to qualify as a science, a field must DESCRIBE a data set accurately. With that accomplished, it may then be used to PREDICT future data points. Ultimately it should then be able to CONTROL. This is the minimum standard that a field of study should be subjected to in order to qualify as a Science.

    Clearly the field of study known as Economics fails to meet this test.

    So, what am I saying. I am saying that a debate has been conducted with inaccurate and false data. No one knows what would happen if the United States would default. But it is certainly happened before. But clearly, on August 2 2011, Obama and Geitner’s day of the apocolypse, the United States has enough money in its coffers to pay Social Security, Medicare, and yes even pay the troops for months to come.

    And to invoke principles of a THEORY to PREDICT a future course of events is ludicrous.

    Everyone should step back, consider the facts, and ask the very simple question: If the above is true, what is really going on here? The more I consider the above, the more my anger grows and the more outraged I become because this has not been an honest debate. It is simply nothing more that another smoke and mirrors episode conducted by our elected snake oil salesmen in DC. This country has real problems and they are not being addressed at all by the clowns who are supposed to serve us.

  20. Appreciate the reality check.

  21. I’m honestly just incredibly disillusioned with the spirit of partisanship in Washington. Watching CSPAN last night, it just became impossible for me to see how anything will ever get done, not because I don’t think there are capable people on Capital Hill, but just because the incentives of the system are skewed towards good posturing, not good policy. It’s completely theatrical and it’s systemic. I’m really questioning the wisdom of even trying to talk about policy much right now, since it’s almost inevitable that politics will prevent efficient legislation from getting through.

  22. I agree with you totally.

  23. It is Monday morning following the news that a bipartisan debt deal has been reached. It can best be summarized in the words of Tyler Durden at ZeroHedge.com, a site all should follow:

    “In a much anticipated statement, Obama just announced that he has struck a deal with Boehner on the debt and the deficit, which will allow the US to avoid default. And also, as Reuters adds, Obama said that spending cuts included in deal to raise the debt ceiling will not happen so quickly that they will drag on the fragile U.S. economy. In other words, there will be no cuts for the immediate future. But there will be a single $2.4 trillion debt ceiling raise (based on a Joint Committee green light, LOL) just as Obama desired. And of course, there will be no tax hikes. Bottom line: there will be about $40 billion in actual, real spending cuts until the next, $16.7 trillion debt ceiling limit is hit some time in Q1 2013, at which point it will have to be raised to $20+ trillion. But no really, they are cutting spending and all that.”

    I, for one, cannot only credit the genius of the Democrats and their Noble Prize winning leader for this masterwork. After all, the Republicans and their top notch brain trust deserve equal amounts of credit. Yes, it is a win win for the power elite. The only problem is that the American people have had the ole scare and then be grateful we are here to save you from the brink of the abyss trick sprung on them yet again. One day, when the instability created by these criminals reels so far out of control, and the trick no longer works, watch out. My sense is that day is not too far away.

    Ah, to bask in the dream of change you can believe in……….

  24. Concerned Citizen

    Jennie, here’s the (non-partisan) CBO on all sorts of different kinds of stimulus http://www.cbo.gov/ftpdocs/108xx/doc10803/01-14-Employment.pdf. I should also point out that, following your line of logic, if tax cuts don’t create jobs, then tax increase shouldn’t destroy jobs. So why are we even having this discussion at all? Keynesianism tells a simple story: in macroeconomics, my spending is your income and vice versa. But sometimes, when the economy goes bad, we both cut back on spending, meaning our incomes go down, causing us to cut back our spending again, etc. We are now clearly stuck in a trap in which we both have low incomes and low spending even though we have the potential to have higher incomes and higher spending. It is in these situations where the government must step in either with spending increases or with tax cuts to allow us to spend more. And if we both spend more, then we both make more, and we both spend more, etc. until our incomes rise back to where they were. Tell me, Jennie, or whoever else, why that narrative is wrong and what narrative you would use instead.

    Stuart, you are, of course, absolutely correct that economics cannot be classified as an exact science. But does that mean it can offer us nothing? I don’t think so. You sound an awful lot like Herbert Hoover: “Screw this “economics” magic, let’s just allow people to work it out on their own.” Also, please do not ignore the fact that inflation erodes the value of money. A dollar is worth far less ten years from now than it is today; for that reason, it is true that “cutting spending” in nominal terms would mean truly draconian cuts to all these programs. I suppose my only question for you, Stuart, is how you would run the government if you were in charge and didn’t have all these smarty-pants “economists” telling you what to do.

  25. Concern citizen:
    Your narrative is wrong simply because you assume that the government can alter natural law. A simple look back over say the last 200 years clearly demonstrates the existence of cycles in almost eveything ranging from climate, geology, and economics and business. The existence of a four year “presidential” cycle to the broad stock market has been well documented, meaning every four years, the Dow will make a trough There are many others. .Cycles are fractal, meaning they consist of smaller cycles and are part of larger cycles. The notion of smoothing out these cycles, to make recessions and depressions less harsh is attractive. The results, however, have been, say we say, miserable. Every time the government intervenes, the cycles still play out…and they are not dampened in any way: in fact, they are often made worse. Case in point: QE1 and QE2. The ISM print today of 50.9 versus the consensus estimate of 54. All the massive money printing and all the government sponsored support of both the stock and the bond market has done….shit.
    So why is it still done? The great Keynesian approach fails time and time again. But not to worry, QE3 is just around the bend.
    As far as sounding like Hoover, well, I don’t recall writing anything about screwing anything. Read the words: they say, economics is not a science and therefore should not be used to try to control anything.
    As to how I would run the government, it is very simple. It is the same way I run my life….I try to live below my means, I try to incentivize and reward hard work, I try to disincentivize laziness. I try to spend my savings on my kids education, I try not to fight wars, I try not to have my troops in over 150 countries. And as a health professional, I try to treat my patient’s from a scientific, evidence based approach, not from a theory that has barely made it out of infancy

  26. hey concerned,
    good to hear from you.
    you are SO right when you say Keynesianism tells a story. you bet it does… a story i don’t fall for. again, when you transfer wealth you allow the transferrees to spend more and the transferers to spend less. you have to create something new to have a net increase in the system.

    but who cares what i think? the proof is in the pudding. the current administration unleashed a keynesian delightand what’s been the outcome? Persistent joblessness and economic drag. The Keynesians attribute this to George Bush, Japan’s nuclear disaster, and most recently, the public’s “anxiety” over the debt crisis (at the very same time they say the public is too stupid to understand it… go figure). The remedy, according to the K’s, is yet more “stimulus” and no doubt the Federal Reserve Satan, AKA Bernanke, has a few more QE’s up his sleeve. Fasten your seatbelt and check to make sure your air bag will deploy when needed.

    I say if something doesn’t work, consider trying something else. History indeed repeats itself: the latest foray into Keynesian economics is the same failure now as it has been when tried in the past.

    By the way, for all those “experts” so sure they could predict the future, those who warned us that the markets would tank if there was no agreement on the debt ceiling… what say they today? An agreement was reached and the markets haven’t responded with enthusiasm, as you would have expected if you believed those very experts. The fact is, the market knows this deal does not much to address the very real and very serious debt debacle owned by the US.

    I’m guessing all those guys in Congress are getting massages today: those quads must really hurt from the kicking the can down the road yet again.

    That’s my narrative.

  27. Concerned Citizen

    Hmm… Stuart, I don’t take very well to your proclamation that “natural law” dictates that everything must be in cycles. This, quite simply, is total bullshit. You call yourself a medical professional, so look at medicine. Have we seen cycles? No, of course not. We’ve seen constant progress in the form of lower infant mortality, longer life expectancies, and many other health metrics. Or maybe we could try global poverty. Again, constant progress. In fact, even the stock market shows constant progress over the long-term, though obviously there are ups and downs. So the idea that there are always cycles in everything that we can do nothing about is a very stupid and very dangerous idea.

    Next, you move on to the fact that government intervention has made the crisis worse. Based on what, I would venture to ask. I maintain that things would have been much worse if the government had done nothing. In fact, when Congress elected to do nothing and voted down the notorious TARP bailout in 2008, the stock market cratered. It regained its value after TARP was approved. We’ll never know, of course, whether government has made things better or worse because we can’t run an experiment, but Stuart the scientist could’ve told us that. If you’re going to claim that economics isn’t a science but a theory, then don’t parade your theories of the crisis around as if they were science.

    But let’s zoom out here and make a more general point about government economic intervention: you cannot seriously argue that the economy was better off when the government intervened almost not at all. Pre-Depression, there was a huge banking crisis every 20 years or so. And by “banking crisis,” I mean people were literally running to banks while shitting their pants, hoping that all of their savings wouldn’t be destroyed as their friendly neighborhood bank went under. And these crises would lead to periods of prolonged unemployment. The Great Depression itself is probably the best example to illustrate my point. Hoover tried your strategy of non-intervention from 1929 to 1933. Did it work? In a word: no. Things were just as bad when FDR took office as they had been at the outset. And then he turned it around, though even he screwed up by cutting spending too soon (1937 backslide, anyone?) and we had to be saved by (all the government spending as a result of) World War II.

    Here’s the thing about post-Depression economic crises: they weren’t really so bad. Why? Well, Big Brother set up the Federal Reserve to keep watch over your money and guess what? It did a damn good job of it. Unfortunately, the Fed can only do so much so when a ginormous crisis like the Great Recession comes along, it can only do so much. The answer in that situation, our situation, is, of course, Keynesian stimulus. There’s a reason we haven’t seen an event as large as the Great Depression in almost 80 years before the current crisis. The chances of not seeing a big crisis if the odds were truly random are… well, you’re the scientist.

    And to rebut your final points, I agree with you to a large degree. I understand that economics isn’t a hard science. I wish one could prove things like in the hard sciences in economics. But, alas, we can’t and we never will be able to because we can’t run randomized experiments to test conclusions. If you want to throw out economics, and this is the key point here, you also have to throw out everything that isn’t verifiable by random trial. That’s absurd. The majority of disciplines would cease to exist under your plan. No one has ever run a randomized trial to see if parachutes work. Why? Because then you’d have to push people out of a plane without a parachute. All the available evidence we have indicates that parachutes work, but we can’t say, to Stuart’s standards, that they work unless we have a randomized experiment. Better avoid skydiving. Or use common sense, look at evidence and draw what conclusions we can.

    As for the way you live your life, those are noble sentiments. But they don’t exactly translate into governing decisions. You want to “live below your means.” So do you want to increase taxes or decrease spending to balance the budget? And I assume you want loads more investment in education. I’m with you there, as I am on lower defense spending. Gee, I wish we had a word for making these kinds of decisions. Oh right, we do: economics.

    In the end, I asked a specific question about where my narrative went wrong, and you answered in weird generalities and you went on with more pontificating. So please, go back to my last post and look at the story I laid out there for why Keynesian measures work and tell me, specifically, where I’m wrong. And, for the record, I do my damndest to keep my troops out of 150 countries, too.

  28. Concerned Citizen

    Jennie, I’ll be brief. First, and I can’t stress this enough, *I’ve already said why you are wrong about the whole spend-now-tax-later thing.* Yes, eventually, taxpayers will finance stimulus spending, but that’s why we have deficit spending. In this case, the government can boost demand and boost income *in the short run* by increasing spending to get our economy back to its potential. And how can you say that Keynesianism hasn’t worked in the past? An example? Second, no liberal economist has said that “uncertainty” over anything is a drag on the economy. People have too little money and they aren’t spending enough of it. That’s the drag on the economy. I agree that the deal did nothing for the markets! But only because debt isn’t the real problem; aggregate demand is and will continue to be. Third, more of a digression, why do conservatives hate the QE’s so much? If they didn’t do anything, as conservatives maintain, then why all the hate? Lastly, while you end your post with a witty little “That’s my narrative,” you didn’t give one. Seriously, come on now. Our economy was humming along and then it wasn’t and we can’t seem to recover. Why? Specifically, why? There must be a reason the economy is in a ditch. Tell me how the economy got into the ditch and why it can’t get out and please be specific. Is it debt? Taxes? What? Doing these little end-runs around the issue aren’t helping anything.

    Please, stop hiding and give me a real answer.

  29. Concerned, no need to get nasty when you are challenged.
    Your response re cyclic theory shows you have no knowledge of it…..please learn a bit before launching…you might start with the law of vibration and then go on to wave theory.

    I repeat: you narrative is wrong because the government can’t supercede economic cycles. BTW, there is a 90 year cycle. Try doing a little math going back in time and you will discover where 2008 came from. The goverment and then Fed helped with that…..oh wait you will say that without the help the SP500 would have gone to zero…..or maybe it would not.

    Even though you didn’t ask me, we got into this mess by spending too much money. We won’t fix it by spending more.

  30. Concerned Citizen

    Not trying to be nasty Stuart. But I just don’t know what to say about your “cyclic theory”. How these laws apply to our economy is beyond me (though I would have supposed you would have rejected wave *theory*). It’s unclear to me whether you’re talking about a physical application of the law of vibration (i.e. String Theory), which would have absolutely nothing to do with economics, or some sort of meta-application to the world at large. I have to assume its the latter, in which case it’s hard to argue, given that the claim is unfalsifiable and empirical evidence is hard to come by. Though I am quite interested as to exactly why you believe we should apply these ideas to the global economy. And in a response to the idea that advances in medicine have not been cyclical, or that global economic growth has not been cyclical, or that numerous other issues have not been cyclical. Why on earth do we live sooooooo much better than those who lived in 4000 BC if everything is a cycle? Why didn’t the stock markets hit zero (or somehow go negative to erase all gains over time) if things are truly cyclical? I must admit, however, that you are moving toward a level of abstraction that makes reasonable debate all but impossible.

    And I debate the notion that spending too much money got us into this mess. A financial crisis and a set of unfunded tax cuts got us to where we are today (though, yes, some war spending had something to do with it).

  31. Concerned,
    First, i want to agree with stuart, that if you can’t play nice in the sandbox, don’t play. (remind me, weren’t you the commenter who railed against ad hominum (feel free to make a comment about my spelling… i’ll focus on content)
    you can go on for pages and pages and write the most detailed narrative but what we got is what we got. the economy stinks. i love that you are on record that debt is not the problem, just aggregate demand. No joke, I can see you being a Fed chairman in the future.
    the narrative was “hope and change” and the vehicle was Keynesian. the outcome was at best, “status quo” (remind me: have we closed Guantanamo? does ghadafi think we stopped meddling ? have we achieved the promise of 8% unemployment if we only deployed a trillion or so?). Keynesians can never lose: since the experiment failed so far, we can conveniently conclude not enough was spent.
    This administration’s policies have been an abysmal failure… just ask the average Texas hick.

  32. lemming [ˈlɛmɪŋ]
    n
    1. a member of any large group following an unthinking course towards mass destruction
    [from Norwegian; related to Latin latrāre to bark]

  33. Concerned, I will try to explain. When confronted with a complex data set, 2 broad conclusions are generally reached.
    1. Randomness with no pattern
    2. Pattern…although it might be difficult to extract

    Ever read that the stock market is random and unpredictable. The reference to this is the book “A Random Walk Down Wall Street.” My favorite subreference is “Stocks for the Long Term” by Jeremy Siegel at Warton. Siegels book came out in 2007 and had you followed this poor academic’s advise and you were within 10 years of retirement you would now be frying burgers at McDonalds. Siegel and Maikiel are 2 smart guys just like you….but they were and are probably still ignorant of key chunks of knowledge and information. So were the most inhabitants of the Earth in 1490 regarding its shape.

    What does this have to do with the global economy? Everything. Remember DESCRIPTION, PREDICTION, CONTROL.

    A cycle is very simply a regularly repeating event in PAST and FUTURE TIME. It simply consist of a trough, a peak, and then another trough. It doesn’t have anything immediately concerning trend, which is a general tendency. So as an exercise, please pull up any chart, of any market, in any time frame on Yahoo finance and look what happen every 18 – 22 bars with more than eighty percent regularity. That is a cycle. A cycle is a wave. And waves are the structure of everything.
    This is not string theory. The law of vibration defines the properties of waves.
    Your view is that the economy is the result solely of man’s choice. This view states that events are structured by physical law and so our ability to alter them is not zero but it is not great.
    For a quick example, today look at all the US stock indices. They are about to make a low and then bounce. Why, because a debt deal will be passed and the US will not default. Nope. This bounce was baked into the cake months ago. It will happen with 80% probability.
    Just because the economy is such a complex data set, doesn’t mean we can’t understand it yet. It just means we can’t understand it now. But we should not use anything that doesn’t even DESCRIBE past events to CONTROL futures ones because it will not work.

  34. Concerned Citizen

    Stuart, I’m afraid you’ve gone five steps too many down the rabbit hole into “crazy, weird theories” for me. (As one aside, I must argue, Stuart, that your analysis of Siegel’s work lacks the key insight that “long-term” can mean 30 years or more. If you were 10 years from retirement and investing optimally, you would have divested from the stock market enough to limit your risk exposure. Ok, back to my main arguments.) Look, I’m trying to be simple here. Clearly, our economy isn’t producing at potential right now. That means resources are going underutilized, including lots of workers are sitting at home when they could (and should) be at work making stuff. Now, all I’m saying is that if government puts money in people’s pockets either through employing unemployed people or cutting taxes, they’ll then turn around and buy other things with that money. And, in turn, the people they buy things from will buy other things, and pay other people, etc. That means more people at work, making stuff and repairing our economy. This will allow the economy to reduce the output gap between where we are now and where we could be at potential and, if the government puts enough money in people’s pockets, the economy will get back to potential.

    Now, please, Stuart, Jennie, whomever, tell me where specifically that goes wrong. Do people actually save most of the money the government gives out? Does it fall into a hole in the ground? Does it float into a hole in the sky? I’m sure you’ve been wondering: Why is Concerned so worried about this idea of a narrative? Here’s the reason: anyone can talk in sweeping generalities. Look, I can do it too! The government should always spend more, not less! The only way for the economy to get back on its feet is through more spending! Anyone who doesn’t agree with me is clearly wrong!

    See, it’s easy to talk in an abstract, theoretical sense about what the government should and shouldn’t do. The thing is, if everyone does that, we aren’t having a discussion at all. We’re bellowing past each other. The government needs to spend more! The government needs to spend less! Who’s right? Who cares?! If we are going to drill down and try to understand each others’ ideas, we have to get specific.

    I’ve been so insistent on this idea of a narrative because I know I could be wrong. But, if I’m wrong, there’s something wrong with the implications of my theory. Obviously, I don’t think I’m wrong; I’ve been trying desperately to get you to critique my ideas so I can critique your critique and maybe we can actually learn something here. Or you could throw out how you think the economy works and why you think it’s depressed and I could critique your ideas. You both say that the government spends too much. But how, specifically, will cutting spending get us out of the trap the economy is in right now? Do you believe that people will gain so much confidence that they will begin to invest? Does it have to do with uncertainty? You can’t just stand on the sidelines and lob rhetorical hand grenades that are great soundbites. “Washington has a spending problem, not a revenue problem!” If that’s what you think, tell me why. We have been running deficits, but deficits are spending minus revenue, so we could also raise taxes. Why is that so bad? And, more importantly, how will cutting spending get us out of the ecnomic trap that we’re in.

    Stuart, I hope you’ll climb down off of your ideological high horse and talk to me about this crisis, this economy, right here, right now as specifically as you can. And Jennie, please don’t talk to me about ad hominem attacks. You opened that door when you said I couldn’t get a “job” because of my “economic situation.” Just because my character assaults were more eloquent or better formed doesn’t mean that you get a pass. It also doesn’t make it right for me to flame you, so if I’ve offended you, I apologize.

  35. Your narrative has already been played out . . . no need for me to spell it out.
    It’s called Greece, Italy, etc. Europe is years ahead of the US in the statism experiment and I hope we can all agree as to how well that has fared.
    Right here in the good ole U S of A, 51% of the population is paying 100% of the federal taxes, so I wager those folks have done more than their fare share. Ask them for more and maybe they’ll give it to you, or maybe they’ll take some steps to avoid being further taxed, such as deciding not to make any extra income (and possibly thereby not create any jobs that would provide income to others).
    Your team plays the populist card while sharing the bed with the power elite.
    Obama keeps referring to “millionaires and billionaires” not doing enough, but in the same breath defines the rich as a couple making $250,000 or more a year. Let’s do that math: a family of 4 making that annual income will probably take home around half of that lofty number. If by any rare chance they too would like to send their kids to Sidwell Friends, just like the president does, chances are the math won’t work if they also need to pay a mortgage, eat, drive a car, and some of those other luxuries of life. It’s nice to play the populist card but the Texas hick is the one who always gets screwed, and the Goldman Sachs partner never does (especially since he’s a big donor for this president). Shall we get back into bed?

  36. Concerned Citizen

    Good to see you willing to engage on some substantive points Jennie. I have a few responses. First, I’m not sure I understand your points about Europe. Greece and Italy are in colossally worse fiscal scenarios than we are. Much of this stems from the fact that they are locked into a monetary union (the EU) without being part of a political union. But there are certainly some underlying financial problems. The fiscal problems of Greece and the United States, however, are really incomparable. In fact, American finances aren’t in really bad shape right now. Yeah, we have a big debt burden. But the American economy is also really big. So when does debt become a problem? I would, as I assume you would as well, rather let the market be the judge of that than any technocrat. And right now the real interest rates on 5 and 10 year T-bonds is actually *negative.* That’s right; investors are paying us to take their money. If our interest rates were rising fast like they are in Greece in Italy? I’d be much more open to fiscal austerity arguments. But the evidence just isn’t there. And given the fact that the market has clearly judged that we don’t have a fiscal crisis (negative interest rates!), we should, indeed must, turn our attention toward our jobs crisis with more deficit spending. I’d be open to continuing this discussion, but you’re going to have to get more specific about what similarities you see between the mess in Europe and the US.

    On your first tax point, I’m sorry to say that you are simply flat wrong. You are correct that 49% of the population pays no federal INCOME taxes. But there are other federal taxes, like the FICA or payroll tax. And then there are state and local taxes, which are highly regressive. I’ll direct you here for more gritty details: http://voices.washingtonpost.com/ezra-klein/2010/04/do_the_poor_really_pay_no_taxe.html (the numbers are a little different because that’s from 2010 and we have more poor people now).

    On your point about the incentive effects of taxation, it’s really a great one. There will be some averse incentive effects from greater taxation of the wealthy. The question is: how strong will these effects be? That’s an empirical question; no amount of theoretical argument can get us any closer to the answer. However, I would point out that that logic was the driving force behind the famous Bush tax cuts, the first round of which were enacted more than a decade ago. How’s that working out for you? They are the number one policy choice contributor to the deficits you’ve been screaming about. They make Obama’s stimulus look like chump change. And what did we get for them? A lost decade and rising inequality. I would argue that there’s very little evidence that the kind of trickle-down economics your advocating actually occurs. Instead, the rich just get richer and richer (and richer).

    I want to make a big deal about the point you made at the end of that paragraph. You say, “Your team plays the populist card while sharing the bed with the power elite.” Now, this is the kind of thing that really, really pisses me off. How, in the world, has anything I’ve advocated for put me in “bed with the power elite?” If your next response contains nothing else, I want it to address this point. No, liberals cannot be both big-taxin’ and in bed with all those evil corporate lobbyists. Rich people would oppose what I’m proposing because I’m arguing we should *take more of their money for the general welfare*. You can’t have it both ways. Please stop saying everything bad you can about liberals and just hoping for anything and everything to stick. If anything, Republicans and conservatives argue (or convince themselves of) deluded economic theories because it allows them to make a populist case for cutting taxes for rich people. I could go on for a long time about the blatant hypocrisy of this argument, but I’ll stop and let you attempt to either back off or somehow justify it.

    Moving right along, your entire last paragraph makes little to no sense. First, you say that what Obama is proposing would hurt millionaires and billionaires, but it would actually effect those poor middle class folks paying $250,000! This seems to imply that you’d support raising taxes on those making more than $1 million. Good to hear it! But I doubt you do. Next you list the gripes coming from a family making $250,000. I agree, but here’s the thing: those things would be doubly true for a family making $125,000 per year. Look, if you don’t want to raise taxes, that means specific spending cuts to programs that really do help people. Gutting Medicare means that families of all incomes will have less access to medical care. It sucks that the government has to take money from those who make $250,000. But it would suck even more (indeed, it would be morally repugnant) to let someone die just because they didn’t have enough money to pay for medical care. Can you not see that? I know conservatives love to talk about “waste” in the budget, but the truth is there isn’t that much waste. When you start making deep cuts, you’re hurting real people. I, for one, would just like to target the burden to those most able to bear it.

    As a final point, though I don’t think it’s worth all that much of my time, I do think I should point out the rhetorical trick you’ve attempted to pull with your last point about the “Texas hick.” One sentence you’re talking about a family making $250,000; the next, you’re talking about a presumably poor Texan. The fact that you attempt to equate the two by passing off raising taxes for those making $250,000 with raising taxes on a destitute person doesn’t pass unnoticed, however. I see what you did there! Next time you see a “Texas hick” making more than $250,000, let me know. And, just a thought, the best way to screw that Goldman Sachs partner instead of that loveable Texan? I suppose we could try… raising his taxes.

    I might be tempted to jump into bed, Jennie, if it wasn’t so full of conservatives like yourself.

  37. You have another think coming.

  38. Concerned, it looks like we’re just going to have to agree to disagree. I’m looking forward to the Charles Krauthammer interview scheduled on Chrosstalk next week. He has been the voice of reason for many years, an idealogue whose views I both admire and subscribe to, and far more eloquent a writer/ speaker than you or I will ever be.
    See you then?

  39. Concerned Citizen

    I suppose we will have to agree to disagree, though I do hate that turn of phrase in this case. It implies philosophical differences over issues that are, in actuality, fundamentally empirical. It’s easy for people to just throw up their hands and say, “Well, we have different world views!” I don’t like doing that because these are subtle, nuanced issues and I (or whomever I am talking to/debating against) might misunderstand (or, dare I say, be deliberately obtuse in understanding) the points of contention. I do not believe that we have, by an stretch, reached a truly ideological impasse, but I am happy enough to cease the argument anyway.

    It does seem, however, that we can agree on one thing: Charles Krauthammer is, most certainly, an ideologue. I am also intrigued by your contention that he “has been *the* voice of reason for many years.” Does that mean you think he is the preeminent conservative voice in America? I’m always very interested in who conservatives think “speaks for them,” though obviously I imagine there would be quite a bit of disagreement about that among conservatives. I’m interested in continuing this discussion (or perhaps we’ll postpone it until the full Krauthammer interview hits the website) over who “speaks” for the right and for the left. As a leftist, I suppose I’d have to nominate Paul Krugman by virtue of his NYT column and Nobel Prize, though I am definitely open to persuasion. Who are some other candidates for the right? David Brooks? George Will? Thanks to anyone who responds, from either end of the political spectrum.

  40. The current president and Yassir Arafat both won Nobel prizes so it might not be the very best metric. Paul Krugman is in some pretty pathetic company. Who else you got?

  41. Concerned Citizen

    It was more by virtue of the NYT column than anything else that I chose Krugman. And I don’t think you can really dispute his role as the leading intellectual on the left. I mean, I like EJ Dionne Jr. in the Post and a lot of others, especially in the blogosphere, but no one of those people comes close to commanding the kind of attention that Krugman does. Not only does he write his column, it’s always one of the most popular on the NYT website and he writes a very popular blog. The thing about the right-wing, I think, is that they don’t have anyone who is both solidly right-wing and writes in the NYT, certainly the largest platform in the nation. I have great respect for Ross Douthat (and some respect for David Brooks), but are either of those guys conservative enough to be *the* voice (assuming you have to pick one and only one voice) on the right? On the other hand, Krauthammer is certainly solidly of the right, but he writes for the Post, certainly not a small paper but shrinking and without the influence of the NYT. And I also think that a lot of people would consider George Will a better voice for conservatism. Any conservatives have thoughts on this?

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